Contract
THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR
ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO
THIS
NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF
COUNSEL REASONABLY SATISFACTORY TO HURON HOLDINGS, INC. THAT SUCH REGISTRATION
IS NOT REQUIRED.
FOR
VALUE
RECEIVED, MONARCH BAY MANAGEMENT COMPANY, LLC, a California limited liability
company located at 00000 Xxxxxx Xxxxx Xx #000, Xxx Xxxx Xxxxxxxxxx, XX 00000
(the “Maker”),
promises to pay to STI GROUP, INC., a Delaware corporation located at 00000
Xxxxxx Xxxxx Xx #000, Xxx Xxxx Xxxxxxxxxx, XX 00000 (the “Holder”)
or its
registered assigns or successors in interest, the sum of FIFTY THOUSAND Dollars
($50,000), together with any accrued and unpaid interest hereon, on February
23,
2008 (the “Maturity
Date”)
if not
sooner paid.
The
following terms shall apply to this Term Note (this “Note”):
ARTICLE
I
CONTRACT
RATE AND AMORTIZATION
1.1 Interest
Rate.
Subject
to Sections 2.2 and 3.9, interest payable on the outstanding principal amount
of
this Note (the “Principal
Amount”)
shall
accrue at a rate per annum equal to nine percent (10%). Interest shall be (i)
calculated on the basis of a 360 day year, and (ii) payable monthly, in arrears,
commencing on June 1, 2007, on the first business day of each succeeding
calendar month thereafter through and including the Maturity Date, and on the
Maturity Date, whether by acceleration or otherwise.
1.2 Principal
Payments.
Amortizing payments of the aggregate principal amount outstanding under this
Note at any time (the “Principal
Amount”)
shall
be made in cash (or by set-off of amounts payable by Holder to Maker under
the
MBMC Agreement as provided below) by the Maker on June 1, 2007 and on the first
business day of each succeeding calendar month thereafter through and including
the Maturity Date (each, an “Amortization
Date”).
Commencing on the first Amortization Date, the Maker shall make a payment to
the
Holder, on each Amortization Date, in the amount of $5,000 together with any
accrued and unpaid interest on such portion of the Principal Amount plus any
and
all other unpaid amounts which are then owing under this Note (collectively,
the
“Monthly
Amount”).
Any
outstanding Principal Amount together with any accrued and unpaid interest
and
any and all other unpaid amounts which are then owing by the Maker to the Holder
under this Note shall be due and payable on the Maturity Date. Maker, at its
option exercised by notice to Holder at least three business days prior to
any
Amortization Date, shall be permitted to satisfy all or part of its obligations
to pay the Monthly Amount or other amount payable hereunder on the Maturity
Date
by set-off of amounts payable by Holder to Maker under that certain agreement,
dated February 1, 2007 between Maker and Holder, or any successor agreement
(the
“MBMC
Services Agreement”).
1.3 Optional
Redemption.
The
Maker may prepay this Note (“Optional
Redemption”)
by
paying to the Holder a sum of money equal to one hundred percent (100%) of
the
Principal Amount outstanding at such time together with accrued but unpaid
interest thereon and any and all other sums due, accrued or payable to the
Holder arising under this Note (the “Redemption
Amount”)
outstanding on the Redemption Payment Date (as defined below). The Maker shall
deliver to the Holder a written notice of redemption (the “Notice
of Redemption”)
specifying the date for such Optional Redemption (the “Redemption
Payment Date”),
which
date shall be ten (10) business days after the date of the Notice of Redemption
(the “Redemption
Period”).
On the
Redemption Payment Date, the Redemption Amount must be paid in good funds to
the
Holder. In the event the Maker fails to pay the Redemption Amount on the
Redemption Payment Date as set forth herein, then such Redemption Notice will
be
null and void.
ARTICLE
II
EVENTS
OF DEFAULT
2.1 Events
of Default.
The
occurrence of any of the following events set forth in this Section 4.1 shall
constitute an event of default (“Event
of Default”)
hereunder:
(a) Failure
to Pay.
The
Maker fails to pay when due any installment of principal (including, without
limitation, upon a Mandatory Redemption pursuant to Section 1.4), interest
or
other fees hereon in accordance herewith, and, in any such case, such failure
shall continue for a period of three (3) days following the date upon which
any
such payment was due.
(b) Default
Under Other Agreements.
The
occurrence of any default (or similar term) in the observance or performance
of
any other agreement or condition relating to any indebtedness or contingent
obligation of the Maker beyond the period of grace (if any), the effect of
which
default is to cause, or permit the holder or holders of such indebtedness or
beneficiary or beneficiaries of such contingent obligation to cause, such
indebtedness to become due prior to its stated maturity or such contingent
obligation to become payable;
(c)
Bankruptcy.
The
Maker shall (i) apply for, consent to or suffer to exist the appointment
of, or the taking of possession by, a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property, (ii) make a
general assignment for the benefit of creditors, (iii) commence a voluntary
case
under the federal bankruptcy laws (as now or hereafter in effect), (iv) be
adjudicated a bankrupt or insolvent, (v) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vi) acquiesce
to, without challenge within ten (10) days of the filing thereof, or failure
to
have dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (vii) take any action for the
purpose of effecting any of the foregoing;
(d)
Judgments.
Attachments or levies in excess of $100,000 in the aggregate are made upon
the
Maker or a judgment is rendered against the Maker’s property involving a
liability of more than $100,000 which shall not have been vacated, discharged,
stayed or bonded within thirty (30) days from the entry thereof; or
(e)
Insolvency.
The
Maker shall admit in writing its inability, or be generally unable, to pay
its
debts as they become due or cease operations of its present
business.
2.2 Default
Interest.
Following the occurrence and during the continuance of an Event of Default,
the
Maker shall pay additional interest on this Note in an amount equal to two
percent (2%) per month, and all outstanding obligations under this Note,
including unpaid interest, shall continue to accrue interest at such additional
interest rate from the date of such Event of Default until the date such Event
of Default is cured or waived.
2.3 Default
Payment.
Following the occurrence and during the continuance of an Event of Default,
the
Holder, at its option, may demand repayment in full of all obligations and
liabilities owing by Maker to the Holder under this Note.
ARTICLE
III
MISCELLANEOUS
3.1 Cumulative
Remedies.
The
remedies under this Note shall be cumulative.
3.2 Failure
or Indulgence Not Waiver.
No
failure or delay on the part of the Holder hereof in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing hereunder are cumulative to, and not exclusive
of,
any rights or remedies otherwise available.
3.3 Notices.
Any
notice herein required or permitted to be given shall be in writing and shall
be
deemed effectively given: (a) upon personal delivery to the party notified,
(b)
when sent by confirmed telex or facsimile if sent during normal business hours
of the recipient, if not, then on the next business day, (c) five days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification
of
receipt. All communications shall be sent to the Maker and the Holders at the
respective addresses provided herein, or at such other address as the Maker
or
the Holder may designate by ten days advance written notice to the other parties
hereto.
3.4 Amendment
Provision.
The
term “Note” and all references thereto, as used throughout this instrument,
shall mean this instrument as originally executed, or if later amended or
supplemented, then as so amended or supplemented, and any successor instrument
as such successor instrument may be amended or supplemented.
3.5 Assignability.
This
Note shall be binding upon the Maker and its successors and assigns, and shall
inure to the benefit of the Holder and its successors and assigns. The Maker
may
not assign any of its obligations under this Note without the prior written
consent of the Holder, any such purported assignment without such consent being
null and void.
3.6 Cost
of Collection.
In case
of any Event of Default under this Note, the Maker shall pay the Holder
reasonable costs of collection, including reasonable attorneys’
fees.
3.7 Governing
Law, Jurisdiction and Waiver of Jury Trial.
(a) THIS
NOTE
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF
THE STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.
(b) THE
MAKER
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE
COUNTY OF ORANGE, STATE OF CALIFORNIA SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE MAKER, ON THE ONE HAND, AND
THE
HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE OR TO ANY MATTER ARISING
OUT
OF OR RELATED TO THIS NOTE; PROVIDED,
THAT
THE MAKER ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD
BY A COURT LOCATED OUTSIDE OF THE COUNTY OF ORANGE, STATE OF CALIFORNIA; AND
FURTHER PROVIDED,
THAT
NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT
THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
HOLDER. THE MAKER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE MAKER HEREBY WAIVES
ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM
NON CONVENIENS.
THE
MAKER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO THE MAKER AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE MAKER’S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.
(c) THE
MAKER
DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE MAKER HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER AND THE MAKER ARISING
OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS NOTE OR THE TRANSACTIONS RELATED
HERETO.
3.8 Severability.
In the
event that any provision of this Note is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Note.
3.9 Maximum
Payments.
Nothing
contained herein shall be deemed to establish or require the payment of a rate
of interest or other charges in excess of the maximum permitted by applicable
law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum rate permitted by such law, any payments in excess
of such maximum rate shall be credited against amounts owed by the Maker to
the
Holder and thus refunded to the Maker.
3.10 Construction.
Each
party acknowledges that its legal counsel participated in the preparation of
this Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Note to favor any party against the
other.
3.11 Registered
Obligation.
This
Note is intended to be a registered obligation within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i) and the Maker (or its agent) shall register
this Note (and thereafter shall maintain such registration) as to both principal
and any stated interest. Notwithstanding any document, instrument or agreement
relating to this Note to the contrary, transfer of this Note (or the right
to
any payments of principal or stated interest thereunder) may only be effected
by
(i) surrender of this Note and either the reissuance by the Maker of this Note
to the new holder or the issuance by the Maker of a new instrument to the new
holder, or (ii) transfer through a book entry system maintained by the Maker
(or
its agent), within the meaning of Treasury Regulation Section
1.871-14(c)(1)(i)(B).
[Balance
of page intentionally left blank; signature page follows]
IN
WITNESS WHEREOF,
the
Maker has caused this Note to be signed in its name effective as of this 23rd
day of April, 2007.
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MONARCH
BAY MANAGEMENT COMPANY , LLC
By:__________________________________
Name:
Xxxxx Xxxxxxx
Title:
Managing Member
By:__________________________________
Name:
Xxxxx Xxxxx
Title:
Managing Member
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